Previous IPO Pipeline Updates noted the deluge of companies rushing to join the IPO calendar (with 9 last week and 15 the week before) ahead of the upcoming holiday week. After the IPO market cooled off in May, IPO investors have come back to the table, drawn in by high-growth Chinese tech, energy yield plays and exciting biotech deals. Last week the year's IPO count surpassed totals from 2011 and 2012. 18 IPOs are set to price this week (five had priced as of Wednesday morning), which could make it the most active week for IPOs since 2004. And while Independence Day will provide a brief respite, we now have a packed IPO pipeline heading into July as a flood of 21 companies filed initial papers in the past week.

Only two companies set terms since last Wednesday, as most had already chosen to go public this week or wait until the week of July 7. NextEra Energy Partners LP (NYSEMKT:NEP), a master limited partnership carved out of NextEra Energy (NYSE:NEE) to own 10 wind and solar projects, is set to price on Thursday. Dividend growth stocks have soared, and the NextEra yieldco follows the successful IPO Abengoa Yield (NASDAQ:ABY), which priced above its range two weeks ago and trades 32% above the IPO price. The energy sector has raised the most proceeds this year, and has outperformed the top sectors in aftermarket trading, where gains are available to ordinary investors. Energy companies have responded to the trend: After Friday, 8 out of the year's 17 energy IPOs (47%) will have occurred in June. The week’s other terms filer, Louisiana bank Investar Holding (NASDAQ:ISTR), is set to raise $46 million and price on Monday. The financial sector has raised the second most in proceeds, but is the worst-performing sector, with an average return of less than 4%.

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IPO terms filings (week of June 16, 2014)

Company (Ticker)

Business

Deal Size ($mm)

LTM Sales ($mm)

NextEra Energy Partners LP (NEP)

Renewable energy MLP from NextEra Energy

$325

$169

Investar Holding (ISTR)

Louisiana commercial bank with 10 branches

$46

$27

Click to enlarge

37 companies have submitted initial filings so far this month, including 21 in the past week. The year's total is now 206, which is 91% higher than 2013 YTD but still nowhere close to the 493 in the first half of 2000. After March's 44 filings, June could again surpass the 40 seen in August 2007. Recent IPO filings include several notable private equity deals and run the gamut of industries. They are primarily focused around health care and energy but also include a few financial, tech and consumer IPOs.

This year’s 13 LBO IPOs (two more, ServiceMaster and Michaels, are expected this week) have largely underperformed, averaging less than a 4% return. And yet four more private equity-backed leveraged buyouts were added to the pipeline in the past week. We estimate that VWR, one of three global laboratory chemicals and equipment suppliers, could raise $750 million. Madison Dearborn bought it from CD&R in 2004, which LBO'd the company from Merck in 1999. Smart & Final (NYSE:SFS) operates warehouse-style grocery stores and represents a major exit for sponsor Ares Management (NYSE:ARES), which itself went public in May. Townsquare Media (NYSE:TSQ) emerged from bankruptcy in 2010 controlled by Oaktree with a major investment from GE Capital and now claims its localized and digital media-centric strategy will reverse the tides of a struggling radio industry. Lantheus (NASDAQ:LNTH), which sells medical imaging agents used in the diagnosis of cardiovascular diseases, was formerly a division of DuPont and then Bristol-Myers Squibb until Avista Capital bought the company in 2008. El Pollo Loco (NASDAQ:LOCO), a fast-growing fast food chain serving Tex-Mex chicken dishes, is controlled by Trimaran Capital Partners after a $415 million investment in 2005. The company no doubt hopes to follow in the footsteps of Zoe's Kitchen (ZOES, up 117% from April IPO) and not Papa Murphy's (FRSH, down 17% from May IPO).

Just as a wave of biotech and early-stage health care companies leave the pipeline, a new round of IPO filers take their place. These drug companies are notable for having strong backers and using advanced knowledge of the body's own defense and regenerative systems. Tobira Therapeutics (NASDAQ:TBRA) is developing immunotherapy drugs for NASH and HIV while Immune Design (NASDAQ:IMDZ) targets cancers. Immunotherapy has received immense interest for its effectiveness and wide range of potential indications, as seen in Kite Pharma's (NASDAQ:KITE) 71% first-day pop after pricing 31% above the midpoint. Macrocure (NASDAQ:MCUR) takes white blood cells from donors and then uses gene therapy to create an injectable drug for treating diabetic foot ulcers, venous leg ulcers and other hard-to-heal wounds. Three IPO filers are also developing products that the body recognizes and absorbs. Intersect ENT (NASDAQ:XENT) has begun marketing a post-surgery nasal implant that releases a steroid for sinusitis over 30 days until fully absorbed. Innocoll's (NASDAQ:INNL) products are collagen-based sponges and used to prevent surgery adhesions, provide slow-release postoperative pain relief and treat diabetic foot infections. Ocular Therapeutix (NASDAQ:OCUL) develops a slow-release absorbable hydrogel implant that continuously delivers medication to the eyes. Last, Zosano Pharma (NASDAQ:ZSAN) develops an adhesive patch using transdermal technology (similar to April IPO Corium International CORI) to treat osteoporosis.

Spinning off energy assets with long-term contracts has proven to be a smart way for companies to immediately raise capital while offering investors a share of cash flows. VTTI Energy Partners LP (NYSE:VTTI), which is expected to raise $420 million, will own refined product and crude oil terminals contributed by its parent. Transocean Partners LLC (NYSE:RIGP) plans to raise $350 million and own three ultra-deepwater rigs with the potential to acquire four more. Looking to support the energy boom, Independence Contract Drilling (NYSE:ICD) provides contracted land drilling rigs for E&Ps in the Permian Basin, and Armada Water Assets (Pending:AWA) treats, supplies and disposes of water used in drilling and fracking.

Two tech firms filed, and both are based out of Israel. MobilEye (NYSE:MBLY), which we estimate could raise $250 million, makes camera-enabled software that reads road conditions to avoid car collisions. Backed by Goldman Sachs, Fidelity and Blackrock, the company's potential valuation was likely boosted by recent news of Google acquiring close peer and intelligent camera maker DropCam. Cyber-Ark Software (NASDAQ:CYBR) filed for a $75 million IPO, and is one of several security software firms with an expected IPO in 2014, after MobileIron, Imprivata and Good Technology. Its product monitors users with administrative access for unusual activity, a common vulnerability for cyber attacks (or if your IT department goes rogue).

So far this year, 134 IPOs have raised $28.9 billion and produced an average first day return of 9%. The Renaissance IPO ETF (symbol: IPO), a cap-weighted basket of newly public companies and indicator of post-IPO performance, has gained 3% compared with almost 6% for the S&P 500. Over the last 30 days, the IPO ETF has risen 6% compared with almost 3% for the S&P 500, suggesting that the IPO market remains receptive to new issuance. The active IPO pipeline includes 140 companies looking to raise a total of $51.8 billion.